Asus FonePad Phone Functionality not as Odd as it Seems

After having spent a few days in Barcelona at this year’s Mobile World Congress, I have had the chance to play around with a few mobile “toys”. A few of these devices caught my eye and the Asus FonePad was interesting not in form factor, but utility. The FonePad is essentially a 7″ Android tablet that makes phone calls. The phone usage model has been the butt of jokes, particularly when holding the tablet u to your face to make a phone call. After seeing the tablet and thinking of future applications, it’s not as silly as it seems.

As a tablet alone, the Asus FonePad is relatively straight forward 7″ Android Jelly bean tablet. The graphics resolution isn’t spectacular at 1,280×800 but in line with other low cost tablets. It also offers storage upgradability, which is a nice feature the Nexus 7 doesn’t offer. The biggest differentiator is the inclusion of a 3G phone, and when priced at $249, provides a real interesting value proposition. This is particularly true as 5″ smartphones can cost $699 unsubsidized.

Let me drill into the phone functionality.

Backup Phone

Too many people focus on the phone functionality as a primary phone…. but it doesn’t have to be the primary phone. The PadFone could make a decent backup phone if your primary has run out of batteries. When I travel, I undoubtedly run out of battery power on my primary device and scramble for a Mophie charger or a power cord. I’d prefer to eject my SIM and put it into my tablet. Sometimes while on a call and while charging, the phone will run out of power and interrupts the call. I’d much rather put my SIM in my tablet.

Primary Phone

It is a little harder to think of the PadFone as your primary device, but there are certain use cases, phone features, and demographics where it cold make sense. Let me dive into those.

Headphone user– Many people don’t put the head up to their ear and opt for a headset. I am one of those. I use a high quality cabled headphones. Others prefer Bluetooth enabled headsets. The worst case is that if they lose their headphones they can put the PadFone up to their ear.

Purse or murse carrier– A 7” tablet for most people puts it out of range to comfortably place in a pocket. Some carry 7” in their back pockets or put it in their coat pocket, but most don’t. Anyone who carries a purse or murse (man purse) won’t have an issue, though.

Battery life– Tired of your smartphone running out of batteries? The PadFone gets 9 hours of continuous use, more than a phone, and it makes sense because it has a much larger battery. It could even get more battery life in usage models where the display isn’t lit up because essentially the guts are a phone.

Speakerphone- A good speakerphone typically has two microphones that are spread out to do noise and echo cancellation. The PadPhone is wider than a phone and theoretically could make a much better speakerphone. Tablets also have more area with louder speakers, too, which is better for a speakerphone.

Price– At $249, this is cheaper than almost every smartphone without a subsidy. You would think a larger 7” tablet costs more than a 4-5” phone, but in some cases, it’s the opposite. With more surface area, manufacturers can use less expensive components that are less integrated, cheaper thermal solutions, and even cheaper glass. Smaller and integrated is more expensive. It’s similar to the way desktops were back in the 90’s. They were cheaper than laptops because they could use larger components and were cheaper to assemble.

Summary

More tablets like the Asus PadFone will emerge that blend voice with tablets. Samsung launched the Galaxy 8 that had voice, too. As consumers and business people get more comfortable with this usage model, it will start to become pervasive, particularly as vendors are looking to differentiate their tablets. Just as some said video was to be watched on TVs, not personal media players like the iPod, consumers want to do most of their usage models on multiple devices and not limit themselves, more people will make calls with their tablets. They already make Skype, FaceTime, and Google Hangouts on tablets, so what makes a phone call any different?

Patrick Moorhead

Patrick Moorhead was ranked the #1 technology industry analyst by Apollo Research for the U.S. and EMEA in May, 2013.. He is President and Principal Analyst of Moor Insights & Strategy, a high tech analyst firm focused on the ecosystem intersections of the phone, tablet, PC, TV, datacenter and cloud. Moorhead departed AMD in 2011 where he served as Corporate Vice President and Corporate Fellow in the strategy group. There, he developed long-term strategies for mobile computing devices and personal computers. In his 11 years at AMD he also led product management, business planning, product marketing, regional marketing, channel marketing, and corporate marketing. Moorhead worked at Compaq Computer Corp. during their run to the #1 market share leader position in personal computers. Moorhead also served as an executive at AltaVista E-commerce during their peak and pioneered cost per click e-commerce models.

The price seems too good to be true on this one. I’ll believe it when I see it for sale in local shops with the phone functionality intact.

pawhite524

As usual, I find it easy to agree with your posts. In this case it is hard to argue with your theme of “vaporware is always incredible and world shattering but where is the actual product?”
As I started to consider the feasibility of the FonePad, as written about to date, I noted that Asus currently makes the Nexus 7 and probably does this for at least a 10% profit as the OEM for Google who has to handle distribution, marketing, etc. This leads me to believe Asus’ cost of a Nexus 7 is probably no more than $160 to $170 and might be less.
I do not have any idea how much the telephone aspect adds to the cost of this but even if adds $30 to $40 (it is purported to be only a 3G phone like the Nexus 4) at a cost of no more than $200-ish Asus would be in line for a 20% gross profit. This is considerably higher than the reports of profit margins in the high single digits or low double digits touted by so-called analysis companies for most 7″ tablets. Asus could make out fairly well.
Just sayin’…

Defendor

I don’t know all the financial details either. But others charge $600+ for a 5″ smartphone, and Asus will sell 7″ smartphone for $250. I am missing something here.

I really don’t buy the bigger is cheaper because it is less integrated argument. A 7″ tablet will be using components built on the same process unless you are talking about the latest bleeding edge 28nm A15 SoCs.

But older 32-40nm A9 SoCs are going to be the same price for both. Same SSD devices etc. They only things that will actually be different is the screen/battery which will be larger more expensive in the 7″ “phone”.

pawhite524

To me this makes more sense than a 5.5″ diagonal screen “phablet.” IMHO, a 7″ tablet that can also be your phone without relying on VOIP is a darned good idea. After using an iPad mini as an e-reader and for watching some Netflix TV shows in bed I believe 7″ to 8″ screens to be the minimum for consumer enjoyment. Doing the same on my iPod Touch was an exercise in frustration and I felt the same trying a Galaxy Note at a Best Buy.

Should Asus deliver this product at $249, watch out for the stampede as people turn away from the Nexus 4, Nexus 7, and Kindle 7″. IMO, build quality of Asus products has always been rated as C+ to B+/- but if the FonePad is at least as good as the Nexus 7 I think this product could be a license to print money for Asus.

Grwisher

Regarding: “When I travel, I undoubtedly run out of battery power on my primary device and scramble for a Mophie charger or a power cord. I’d prefer to eject my SIM and put it into my tablet.”